Question

The table below shows the expected rates of return for three stocks and their weights in...

The table below shows the expected rates of return for three stocks and their weights in some portfolio:

Stock A Stock B Stock C
Portfolio weights 0.3 0.2 0.5
State Probability Expected returns
Recession 0.2 0.08 0.03 0.14
Boom 0.8 0.13 0.05 0.15

1. What is the portfolio return during a recession?

2. What is the expected portfolio return?

3. What is the standard deviation of the portfolio returns?

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